The year 2004 was marked by a number of challenges to the Tongan government, which, like the legislature, was dominated by royal appointees and nobles. Pro-democracy movements and the press promoted reforms of government structure and changes in policy, notably the restrictive media legislation passed by the government in 2003 and challenged successfully in court. After the Supreme Court struck down the law in October, newspapers—those published locally or imported—gained much greater freedom to comment on political affairs without fear of closure.

The government-owned Royal Tongan Airlines collapsed after its sole aircraft used for international flights was repossessed in April and it lacked the funds to repair its sole domestic aircraft in May. The airline was reported to have accumulated debts of $20 million. In its wake two small airlines emerged until the Ministry of Civil Aviation awarded a monopoly license to the company owned by King Taufa’ahau Tupou IV’s eldest son, Crown Prince Tupoutoa. The airline used two leased World War II-vintage DC3 aircraft. The three ministers who opposed the decision were dismissed from office.

The economy suffered when tourism declined in the wake of the collapse of Royal Tongan Airlines. With a narrow export base, high imports, and pressure on the currency because of high imported inflation, domestic inflation was running at 12% for the year.